As the leaders of two of the largest medical technology companies in a state rich in health care history and innovation, we welcome President Obama to the Twin Cities as part of his push for health care reform. Mr. President, we are excited by your visit, and we applaud your efforts to achieve bipartisan support for meaningful reform.
Minnesota is proud to be a leader and innovator in health care -- including the quality and value of care provided -- and the home of renowned research and treatment facilities like the University of Minnesota and the Mayo Clinic. Our health care institutions span the entire industry's landscape and stand as national and international destinations for treatment and learning.
Our state is also a world leader in research and development in medical technology. Our own larger companies are surrounded by more than 200 small and medium-sized med-tech and biotech enterprises, making Minnesota one of the largest centers of medical and biotechnology innovation in the world. All told, Minnesota's medical and biotech sector accounts for more than 60,000 direct jobs and more than 200,000 additional sector-related jobs.
As leaders in that sector, we share your goal of health care reform, particularly of expanding access and making health care affordable and available to all. We also support key delivery and payment-system reforms aimed at achieving critical efficiencies and improvements in patient care, such as comparative effectiveness research, value-based purchasing and policies that preserve patient and physician choice. We continue to work with your administration and with Congress in an effort to see these initiatives adopted.
We were also pleased you addressed the issue of medical malpractice reform in your address to Congress. As a driver of direct and indirect costs through lawsuits and "defensive medicine," our nation's system of medical malpractice is badly broken and stands ripe for change. Your proposal is a step in the right direction, and we hope it is the first step in more fundamental reforms that you will support.
We also support your goal to "slow the growth of health care costs for our families, our businesses and our government." Mr. President, medical technology is integral to the solutions you seek. For this reason, we are deeply troubled by a key provision in the Senate Finance Committee proposal that would tax the medical device industry by $40 billion over the next 10 years. We hope that you, along with our senators and representatives, will oppose it vigorously for three important reasons:
•First, as with any tax, this provision will increase overall health care costs for patients, instead of reducing them. A major goal of health care reform is to constrain costs, but such a direct, punitive tax would, in the end, drive them up and could limit patient access to care, four years ahead of coverage expansion.
•Second, this tax will stifle innovation and job growth. It will dramatically increase the effective tax rate for companies in our industry -- severely reducing financial resources that could be used for research and development, investments in manufacturing and jobs.
•Third, the medical device industry will be contributing to cost containment and savings in other ways, so this tax would amount to a "double hit" for our industry. Hospitals have agreed to secure more than $155 billion in savings to help finance health care reform. These cuts will be achieved in some part through concessions from the device industry.
In short, the medical device tax would undermine America's -- and Minnesota's -- global leadership position in product innovation, clinical research and patient care, and, in a challenging economic environment, would almost surely lead to further job losses.
Mr. President, there are smarter and fairer ways to raise revenue or reduce spending to finance an expansion of coverage -- such as electronic medical records, eliminating waste and abuse and medical malpractice reform -- that wouldn't harm patients and innovation or result in job losses here in Minnesota and other states.
As we welcome you to Minnesota, we hope that you and the Minnesota congressional delegation will stand with us against the medical device tax and focus instead on fair reforms that make a real difference for patients. We look forward to working with you and the Congress toward this end in the weeks ahead.
Bill Hawkins is chairman and CEO of Medtronic Inc. Ray Elliott is CEO of Boston Scientific Corp.